\u3000\u30 Fawer Automotive Parts Limited Company(000030) 30 Zuming Bean Products Co.Ltd(003030) )
Event overview: on March 2, Zuming Bean Products Co.Ltd(003030) announced that it plans to sign the project investment cooperation agreement with the Management Committee of Wuhan Jiangxia economic development zone. It plans to establish a wholly-owned or holding subsidiary in Jiangxia economic development zone and invest 300 million yuan to build production plants. The products include fresh bean products, plant protein drinks, leisure bean products, etc. it is expected that the output value will reach 330 million yuan within five years after completion.
“Another city” for expansion in other places, mergers and acquisitions + Construction of factories in other places to promote national expansion. The ancestral name has a certain brand awareness in the Yangtze River Delta region and has a full market share in Hangzhou, Ningbo, Shaoxing and other cities. It has become a leading enterprise in the interruption layer of China’s bean products industry. While consolidating the advantages of the Yangtze River Delta, Zuming also carried out nationwide expansion through mergers and acquisitions and the establishment of factories in other places: (1) mergers and acquisitions. The company acquired a bean product factory in Yangzhou in 2008. At present, it has formed a revenue scale of nearly 100 million. In 2022, it will focus on the relocation and construction of Yangzhou factory. In 2021, it reached equity investment with Nanjing Guoguo and Guizhou longyuansheng. At present, it has assisted them in digital management upgrading, connected multiple business and financial systems, and dispatched production and sales personnel to help improve quality control and strengthen market expansion. It is expected that the “Yangzhou experience” will be replicated again in North China, the Pearl River Delta and other regions to achieve rapid expansion in other places. (2) In 2010, the company built Anji factory, equipped with high-end production lines in Japan, which has become the most important production base of the company. This time in Wuhan, that is to copy the “Anji model” and “go to the next city” by building factories in other places. First of all, Wuhan has a sufficient population base and can quickly digest fresh products; Secondly, Wuhan does not have an absolute leading brand, the market pattern is scattered, and there is no obvious entry barrier. However, it will be easier to expand channels if the ancestral name reaches cooperation with the government; In addition, during the epidemic period, ancestral names have been supplied to Wuhan through HEMA and other channels, and have a certain brand awareness and channel foundation in the local area.
Firmly optimistic about the 22-year development, the main industry continues to grow steadily, and the expansion of soybean planting area is expected to drive the cost down. In 2022, we expect the company’s revenue to achieve double-digit growth, mainly due to: (1) the demand for household fresh bean products is relatively stable. The company is a “vegetable basket” enterprise in Hangzhou, and its production and operation can be guaranteed first. (2) The catering business department has been set up at the catering end to connect with b-end customers such as chain fast food and school canteen. It is expected that the catering sector will achieve rapid development under the condition of gradual repair of the catering industry. (3) East China focuses on the potential markets in Shanghai and Anhui, improves the store image, plans sales strategies, and develops the market through multiple channels. Hangzhou and other advantageous markets have been intensively cultivated and sunk to further supplement the sales terminals. In terms of cost, it is expected that soybean prices will remain high before May this year. With the expansion of soybean planting area in core production areas such as Heilongjiang and Inner Mongolia, soybean prices are expected to gradually decline before the new procurement season.
Investment suggestion: it is estimated that the company will achieve a revenue of 1.333/15.57/1.787 billion yuan from 2021 to 2023, a year-on-year increase of + 8.8% / + 16.8% / + 14.8%; The net profit attributable to the parent company was 61 / 98 / 121 million yuan, with a year-on-year increase of – 39.2% / + 60.3% / + 23.3%, EPS of 0.49/0.79/0.97 yuan and corresponding PE of 50x / 31x / 25X respectively. Considering the steady development of the company’s main business and the performance growth potential brought by remote expansion, the “recommended” rating is maintained.
Risk tip: the cost rises rapidly, the expansion in other places is less than expected, food safety risks, etc.
